Guide: Where should I keep my coins?


#1

Where should I keep my coins?


Since there are so many new people coming and going (myself included), I decided to do up a quick guide and explanation about where you should keep your coins. While this may not be best practice for every one, it's still good information to have so you can make an educated decision. After all, we are talking about money here.

A question you should ask yourself before moving forward is:

Would you hand all of your money over to a complete stranger and ask them to hold on to it for you?

The answer is obviously not so cut and dry as we obviously do this with our financial institutions every day. However, in the world of cryptocurrencies this is a little more dangerous. Unlike financial institutions who can be held accountable for your funds due to regulation, third parties in the cryptocurrency world can only be held accountable through the trust of their customers. We won't go in-depth to discuss the legalities of this as I want to try to keep this as simple as possible.

Options


There are numerous options when it comes to holding your funds in the cryptocurrency world. We're going to take a look at some of them here. Keep in mind that not everyone will agree and people will have their own opinion on which third party should be used or trusted. It's my goal to instill in you the framework that you are solely responsible for your funds and should thoroughly research the options available to you before making your decision. I cannot stress enough how important it is that you understand this. You are in charge of your funds.


Local, Hardware and Swing Wallets

Just as with a physical wallet in your back pocket or in your purse, these options will give you the most control over your funds with very little to no reliance on third parties. I strongly recommend using one of these options to hold your funds. I won't go so far as to say these are the most secure way to hold your funds, but pretty darn close. Out of the rest of the options below, this option is more secure.

You can find a Swing wallet for nearly any OS. The official Zcash client actually has a wallet built into it. You don't have to look any further unless you don't feel comfortable using a command line interface to communicate with the daemon. For Windows and OSX you can use zcash4win and zcash4mac respectfully, thanks to @radix42.

If you're looking for something a little more physical, you can also purchase a hardware wallet. While I personally don't have experience with them directly, here are a few options in no particular order. You will want to research which best suits your needs:

Trezor or Ledger both support Zcash.


Online Wallets

These are the quickest and easiest way to set up a wallet. Unfortunately, it's by far the least secure. You are in essence handing your wallet full of money over to a complete stranger and asking them to hold on to it for you. That being said, there are some fantastic online wallets available and with thorough research you may find one of them suits your needs in place of running your own wallet locally. While I personally control my own wallet, I have used online wallets as well and do see the benefit to some, especially if you're new to cryptocurrency. My only advice is to research. If you think you've researched enough, research some more.

I won't list any personally, but please be aware that you will always run into differing opinions when it comes to things like this. Some people will have experienced no issues while others will have had nothing but problems. It's entirely your responsibility to dig deeper through your own research and decide which to use. As an example, you may find that some of these online wallets are not particularly geared towards miners and micro-transactions. This should be something you research before you start moving funds into a wallet. You will also need to note that as mentioned below with exchanges, it's possible you may not have access to your funds at all times. During maintenance windows or a disabled wallet you don't have control over your funds.

That being said, here is a good place to start when looking for an online wallet: https://www.zcashcommunity.com/wallets/


Exchanges

Exchanges are where you would sell or trade your cryptocurrency. Without exchanges we wouldn't really be here. Although exchanges are important, they are by far the worst place to hold your funds. It may seem logical to place your funds directly in the place where you would be able to transfer, sell or buy quickly. The problem is control. If the exchange goes down or disables the wallet for any reason, you now no longer have access to those funds. In some cases you can still sell or trade, but you may not be able to move those funds. Same as online wallets above, this can be frustrating.


Conclusion

It is very important to research your options. Cryptocurrency is still in it's infant stage and changes are happening every day. Even when you think you know all there is to know, something changes and you need to educate yourself.


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#2

It's contradictory to say that online wallets are the least secure and that exchanges are the worst place to hold your funds.

In my modest opinion security > liquidity and that puts exchanges as the 2nd best place to store your ZEC at the moment.


#3

You're right. However, I wouldn't even place them separate. They're both equally the least secure. That aside, at least with some online wallets you have access to private keys. That puts them above exchanges in terms of which is worse to hold funds. You also don't have to jump through hoops for most online wallets when comparing to exchanges in order to hold or move funds around.


#4

Looks great. Perhaps note that some 3rd-party wallets and exchanges do not recommend you mine directly to them.


#5

Yup it's in there. When I get home I'll see about making it a bit more prominent. :slight_smile:


#6

Cool. Must have missed it when skimming.


#7

I'm doing some fiddling with a few different things to increase my security and am curious what you would recommend:

Let's say I want to use Zcash4win. Where would it be best to install it, personal desktop or the mining rig itself? Or would a 100% dedicated computer to the wallet be better? Such as it is only connected to the internet once a day to sync and then powered off and unplugged.


#8

I'm by no means an expert. I'm still fairly new to all this as well, but from a logical stand point connecting once a day to sync up would be the most secure out of what you've listed. My only concern with doing it the way you're describing is getting to it quickly enough to sell if need be. Let's say you forget to sync it...1 day...2 days...a week goes by. You come to a situation where you need/want to sell it immediately and now you're having to wait for it to sync.

Personally I just have it running on one of my mining rigs.